Evasion (law)
Encyclopedia
In law
, the Doctrine of Evasion is a fundamental public policy
. Whereas a person may legitimately plan his or her affairs so as to avoid the incidence of obligations or liabilities imposed by the law, no-one is allowed to evade the operation of otherwise mandatory provisions once duties and liabilities have been properly imposed or incurred. It is also a common principle in conflict of laws
.
s: in France
, it is termed, fraude à la loi, in Spain
, fraude de ley, in Italy
, violazione di norme di legge, in Germany
, Rechtswidrige Umgehung eines Gesetzes. It reflects the need for government
s to prevent their citizens from intentionally and improperly manipulating their behaviour to prevent mandatory provisions in the law from applying to them. As the translated names necessarily imply, the key is an intention to displace the normal operation of the legal system. Sometimes, this intention will be express. On other occasions, it will be for the courts to decide whether a sufficient intention can be imputed. Once the intention is established, the evasive manoeuvre will be void and the normal legal provisions will apply to the parties.
operate a collection system for taxation revenues within a framework of law, and enforced through independent court
s. Enabling statute
s must be strictly applied, and it is generally against public policy to allow the tax administration to agree to reduce the amount of tax payable by any one individual. Like criminal law
where agreements by the policing authorities to exempt a criminal are prohibited, tax law has a special status as being essential to an organised society in maintaining public trust through the policy of equal treatment in the legal system. Nevertheless, if a tax payer organises his or her affairs so as to exploit a loophole in the law and avoid the incidence of tax liability, this will usually be pemitted. It is not for the courts to legislate and plug the gaps left by the legislature. The test of avoidance will be whether there is a legitimate purpose for the given behaviour. Many states adopt a "business purpose" test, decomposing the transaction into its component steps to determine the true purpose of the transaction(s) (see tax avoidance/evasion).
, the citizens of one state are not allowed to evade, say, the rules relating to marriage
s by blood relatives or by persons of the same biological sex, simply by travelling to and going through a ceremony in a state that does permit such marriages. The policies underpinning such laws are so fundamental to the culture
of a state that they acquire mandatory status (see nullity in the conflict of laws
). The same applies to divorce
. An early case in France
(under the civil law system
) known as the Princess Bauffremont Affair decided by the Cour de cassation
in 1878 [Civ. 18 mars 1878, S.78.1.193 (note Labbé)] saw the princess obtain citizenship
in Germany
for the purpose of obtaining a divorce there and then remarry, returning to France where she attempted to re-establish herself. Because the divorce was not recognised in France, her remarriage was declared null as a fraude à la loi.
, the parties cannot by entering into a voluntary agreement evade obligations imposed by law nor prevent the courts from taking jurisdiction in the event that a dispute arises. And, as with tax, the courts will examine the entire context for any series of transactions that seeks to avoid the operation of law. Hence, if it is illegal to export particular goods from State X to State A, such a law cannot be evaded by entering into back-to-back agreements to export the goods first to State Y and thence to State A. Some laws are sufficiently fundamental that they can never be evaded. Thus, even though the contracts might be perfectly legal, they would be denied enforcement if the effect would be against public policy. The most common policies are those which:
or the choice of law
stage, the most usual manipulation involves the way in which the connecting factors are pleaded as between the lex fori
and the lex loci
so that inconvenient local laws are evaded in favour of a "foreign" law.
with the Drug Trafficking Vessel Interdiction Act
, it is illegal to operate or embark in a submersible vessel or semi-submersible vessel without nationality on an international voyage with the intent to evade detection. This is curious because one of the required proofs of nationality are documents issued under the 1958 Convention on the High Seas
, a convention which Congress has refused to ratify and therefore acknowledge.
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
, the Doctrine of Evasion is a fundamental public policy
Public policy (law)
In private international law, the public policy doctrine or ordre public concerns the body of principles that underpin the operation of legal systems in each state. This addresses the social, moral and economic values that tie a society together: values that vary in different cultures and change...
. Whereas a person may legitimately plan his or her affairs so as to avoid the incidence of obligations or liabilities imposed by the law, no-one is allowed to evade the operation of otherwise mandatory provisions once duties and liabilities have been properly imposed or incurred. It is also a common principle in conflict of laws
Conflict of laws
Conflict of laws is a set of procedural rules that determines which legal system and which jurisdiction's applies to a given dispute...
.
Definition
This is a standard doctrine in most jurisdictionJurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
s: in France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, it is termed, fraude à la loi, in Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
, fraude de ley, in Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
, violazione di norme di legge, in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, Rechtswidrige Umgehung eines Gesetzes. It reflects the need for government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
s to prevent their citizens from intentionally and improperly manipulating their behaviour to prevent mandatory provisions in the law from applying to them. As the translated names necessarily imply, the key is an intention to displace the normal operation of the legal system. Sometimes, this intention will be express. On other occasions, it will be for the courts to decide whether a sufficient intention can be imputed. Once the intention is established, the evasive manoeuvre will be void and the normal legal provisions will apply to the parties.
Taxation
Almost all statesState (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...
operate a collection system for taxation revenues within a framework of law, and enforced through independent court
Court
A court is a form of tribunal, often a governmental institution, with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters in accordance with the rule of law...
s. Enabling statute
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
s must be strictly applied, and it is generally against public policy to allow the tax administration to agree to reduce the amount of tax payable by any one individual. Like criminal law
Criminal law
Criminal law, is the body of law that relates to crime. It might be defined as the body of rules that defines conduct that is not allowed because it is held to threaten, harm or endanger the safety and welfare of people, and that sets out the punishment to be imposed on people who do not obey...
where agreements by the policing authorities to exempt a criminal are prohibited, tax law has a special status as being essential to an organised society in maintaining public trust through the policy of equal treatment in the legal system. Nevertheless, if a tax payer organises his or her affairs so as to exploit a loophole in the law and avoid the incidence of tax liability, this will usually be pemitted. It is not for the courts to legislate and plug the gaps left by the legislature. The test of avoidance will be whether there is a legitimate purpose for the given behaviour. Many states adopt a "business purpose" test, decomposing the transaction into its component steps to determine the true purpose of the transaction(s) (see tax avoidance/evasion).
Family law
In Family LawFamily law
Family law is an area of the law that deals with family-related issues and domestic relations including:*the nature of marriage, civil unions, and domestic partnerships;...
, the citizens of one state are not allowed to evade, say, the rules relating to marriage
Marriage
Marriage is a social union or legal contract between people that creates kinship. It is an institution in which interpersonal relationships, usually intimate and sexual, are acknowledged in a variety of ways, depending on the culture or subculture in which it is found...
s by blood relatives or by persons of the same biological sex, simply by travelling to and going through a ceremony in a state that does permit such marriages. The policies underpinning such laws are so fundamental to the culture
Culture
Culture is a term that has many different inter-related meanings. For example, in 1952, Alfred Kroeber and Clyde Kluckhohn compiled a list of 164 definitions of "culture" in Culture: A Critical Review of Concepts and Definitions...
of a state that they acquire mandatory status (see nullity in the conflict of laws
Nullity (conflict)
In conflict of laws, the issue of nullity in Family Law inspires a wide response among the laws of different states as to the circumstances in which a marriage will be valid, invalid or null...
). The same applies to divorce
Divorce (conflict)
In modern society, the role of marriage and its termination through divorce have become political issues. As people live increasingly mobile lives, the conflict of laws and its choice of law rules are highly relevant to determine:...
. An early case in France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
(under the civil law system
Civil law (legal system)
Civil law is a legal system inspired by Roman law and whose primary feature is that laws are codified into collections, as compared to common law systems that gives great precedential weight to common law on the principle that it is unfair to treat similar facts differently on different...
) known as the Princess Bauffremont Affair decided by the Cour de cassation
Court of Cassation (France)
The French Supreme Court of Judicature is France's court of last resort having jurisdiction over all matters triable in the judicial stream but only scope of review to determine a miscarriage of justice or certify a question of law based solely on points of law...
in 1878 [Civ. 18 mars 1878, S.78.1.193 (note Labbé)] saw the princess obtain citizenship
Citizenship
Citizenship is the state of being a citizen of a particular social, political, national, or human resource community. Citizenship status, under social contract theory, carries with it both rights and responsibilities...
in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
for the purpose of obtaining a divorce there and then remarry, returning to France where she attempted to re-establish herself. Because the divorce was not recognised in France, her remarriage was declared null as a fraude à la loi.
Contract law
In Contract Law, as an exception to the principle of autonomy implicit in the policy of freedom of contractFreedom of contract
Freedom of contract is the freedom of individuals and corporations to form contracts without government restrictions. This is opposed to government restrictions such as minimum wage, competition law, or price fixing...
, the parties cannot by entering into a voluntary agreement evade obligations imposed by law nor prevent the courts from taking jurisdiction in the event that a dispute arises. And, as with tax, the courts will examine the entire context for any series of transactions that seeks to avoid the operation of law. Hence, if it is illegal to export particular goods from State X to State A, such a law cannot be evaded by entering into back-to-back agreements to export the goods first to State Y and thence to State A. Some laws are sufficiently fundamental that they can never be evaded. Thus, even though the contracts might be perfectly legal, they would be denied enforcement if the effect would be against public policy. The most common policies are those which:
- protect against unreasonable restraints of trade, e.g. agreements not to compete after terminating employmentEmploymentEmployment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
or selling a business must allow individuals a reasonable opportunity to earn a living. - protect family relationships, e.g. an agreement relating to the custody of a child and maintenance cannot exclude the power of a court to examine its terms and to judge whether it is in the best interests of the child.
- prevent the enforcement of contracts:
-
- involving commission of a tortTortA tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
or crime; - inducing breach of fiduciary duties;
- inducing a breach in a contract with a third party;
- disclaiming liability for harm caused intentionally, recklessly or negligently (including liability for any misrepresentation). Liability for personal injuries arising from the use of products can be disclaimed only in rare circumstances (e.g., two merchants fairly bargain for it, and the product is experimental).
- involving the waiver or release of entrenched rights, e.g. in the United StatesUnited StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the release of rights granted by the Age Discrimination in Employment Act of 1967, 81 Stat. 602, 29 U.S.C. § 621 will not be effective even if supported by considerationConsiderationConsideration is the central concept in the common law of contracts and is required, in most cases, for a contract to be enforceable. Consideration is the price one pays for another's promise. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from...
unless certain mandatory requirements set out in the Older Workers Benefit Protection Act are complied with.
- involving commission of a tort
Conflict of laws
At either the characterisationCharacterisation (conflict)
In conflict of laws, characterisation is the second stage in the procedure to resolve a lawsuit involving a foreign law element. This process is described in English law as classification and as qualification in French law...
or the choice of law
Choice of law
Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states , or provinces...
stage, the most usual manipulation involves the way in which the connecting factors are pleaded as between the lex fori
Lex fori
Lex fori is a legal term used in the conflict of laws used to refer to the laws of the jurisdiction in which a legal action is brought...
and the lex loci
Lex loci
In conflict of laws, the term lex loci is a shorthand version of the choice of law rules that determine the lex causae.The relevant rules are:* Lex fori* Lex loci actus* Lex loci arbitri* Lex loci celebrationis...
so that inconvenient local laws are evaded in favour of a "foreign" law.
Detection
Under the law of the United StatesLaw of the United States
The law of the United States consists of many levels of codified and uncodified forms of law, of which the most important is the United States Constitution, the foundation of the federal government of the United States...
with the Drug Trafficking Vessel Interdiction Act
Drug Trafficking Vessel Interdiction Act
The Drug Trafficking Vessel Interdiction Act of 2008, , was an act of the United States Congress outlawing operation of or travel in unregistered submersibles and semi-submersibles in international waters with the intent to evade detection....
, it is illegal to operate or embark in a submersible vessel or semi-submersible vessel without nationality on an international voyage with the intent to evade detection. This is curious because one of the required proofs of nationality are documents issued under the 1958 Convention on the High Seas
Convention on the High Seas
The Convention on the High Seas is an international treaty created to codify the rules of international law relating to the high seas, otherwise known as international waters. The treaty was one of four agreed upon at the first United Nations Convention on the Law of the Sea...
, a convention which Congress has refused to ratify and therefore acknowledge.